The Fed has ‘themselves in a corner’: Former official
The Fed’s job has ‘gotten more difficult’: Former official
Former Kansas City Federal Reserve President Thomas Hoenig argues that the central bank has ‘themselves in a corner.’
Former Kansas City Federal Reserve President and CEO Thomas Hoenig argued on Wednesday that the Fed has "themselves in a corner" as the job of the central bank has "gotten more difficult."
Hoenig made the comments on "Mornings with Maria" a few hours before the Federal Reserve is expected to announce a 50-basis point rate hike in what will be the second of several anticipated increases this year as policymakers look to cool red-hot inflation, a move that comes at a precarious time for the U.S. economy as it confronts a continuing pandemic and a war in Europe.
While the Fed's actions are closely monitored by Wall Street, people on Main Street will be impacted, too and should expect to pay more for car loans, mortgages and credit card balances.
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"When you do significant rate increases or anticipate significant rate increases asset values drop," Hoenig noted on Wednesday.
"Remember when you were quantitative easing and you had zero interest rates, those assets were increasing very rapidly, in fact you had serious asset inflation, so now you are doing the opposite."